Most metals rise on trade talk progress; zinc dips on ample stocks

SINGAPORE, May 2 (Reuters) - Most base metals rebounded marginally on Thursday, from a sharp decline in the previous session, as investors cheered reports that the United States and China were making headway in their trade negotiations.

The United States and China are nearing a trade deal, Politico reported on Wednesday. U.S. Treasury Secretary Steven Mnuchin said on his Twitter account that the two countries have completed "productive" talks in Beijing.

Base metals slumped on the London Metal Exchange (LME) on Wednesday, with aluminium and lead hitting their lowest in more than two years, as computer-driven funds sold after an options expiry amid concerns about China demand.

"One of the issues has been the absence of real hard tangible information or data coming out from China that shows a proper pick-up," said Guy Wolf of broker Marex Spectron.

"What is clear for everyone is the major slowdown at the backend of last year is stabilised. What has not happened yet is the strong rebound and I think a lot of that is connected to trade talks with the U.S.," Wolf said.

FUNDAMENTALS

* PRICES: Three-month aluminium was up 0.4 percent at $1,821.50 a tonne, as of 0649 GMT, while nickel was trading almost flat, lead advanced 1 percent and tin gained 0.2 percent.

* POLL: Copper prices are expected to extend their rebound in coming months on recovering demand from China and mine disruptions, while rising zinc supply is seen weighing down prices this year, a Reuters poll showed.

Analysts sharply boosted their copper deficit forecast in 2019 to 205,500 tonnes from 64,000 tonnes previously, and expected zinc to swing to a surplus of 20,000 tonnes in 2019 and 314,000 tonnes in 2020.

* U.S. RATES: The U.S. Federal Reserve on Wednesday held interest rates steady and signalled little appetite to adjust them any time soon, taking heart in continued job gains and economic growth and the likelihood that weak inflation will edge higher.

* U.S. ECONOMY: U.S. manufacturing activity slowed to a 2-1/2-year low in April amid a sharp drop in new orders, while construction spending unexpectedly fell in March, suggesting economic growth was moderating after surging in Jan-March.